When currency goes up, or more money is produced, the prices go up, therefore causing inflation.
All of the items shown- housing prices, insurance, gas, etc., are getting inflated, therefore they cost more money. You have to pay for these out of your wages, or the money that you earn. Therefore, if the other items go up in price, then your wages need to too. Otherwise, you won't be able to pay for some of these things, and that would be a problem. Remember, the whole reason that the item's prices went up in the first place was because of inflation.
Inflation in Rome was one of the reasons that Rome crumbled.
Inflation and other things are the reason that Rome is much different than how it used to be. For example, the Colosseum is not nearly as grand as it used to be. In fact, all of Rome is much less spectacular than it used to be, all because of inflation. (and some other problems)
Inflation Rates of Nations Around the World
As inflation increases, the value of a dollar decreases. You are "flushing money down the toilet," the money just isn't worth much anymore.
Ancient Facts~
Caracalla began the money problem, by giving the soldiers way too much money. For example, he said “nobody should have any money but I, so that I may bestow it upon the soldiers.” Just like he said, he raised the soldiers pay by 50%, and to do so he had to double the inheritance taxes of the Romans.
Caracalla then went on to change what the coins were basically “made out of,” because he changed them to be only 50% silver, when originally, a few generations before him, the coins had been 95% silver.
The denarius was the basic coinage in Rome, and when it was introduced by Augustus, it was about 95% silver at the end of the first century BC. The denarius continued being the basic coinage for about two centuries, which was until about 211 AD.
By the time that Trajan was the emperor, in 117 AD, the coin was only about 85% silver, rather than the original 95% silver.
After Trajan, in about 180 AD, when Marcus Aurelius was emperor, the denarius was only about 75% silver.
During Septimius’ reign, it dropped to being only 60%, and when Caracalla finally ruled, it was down to being only 50% silver.
Caracalla even inflated the gold coinage. Before, during Augustus’ time, 45 coins were worth a pound of gold. Caracalla changed it to being that 50 coins were worth a pound of gold. After 20 years of that, it became much more expensive, because 72 coins were worth a pound of gold.
Diocletian dropped the 72 coins down to 60, but later Constantine raised it once more up to 72.
The real problem came after Caracalla, around 258-275. At that time, the emperors completely changed the silver coinage, for by 268, there was only 0.5% silver in the denarius.
prices during this time rose in most of the parts of the empire by almost 1,000%, and the only people who were getting paid in gold were the barbarians, because they were so uncivilized and barbarous, that they would only take gold in return for their labor.
Diocletian attempted to help stop the problem by lowering how much gold coins (aureus) were worth a pound. (from 72 to 60) He also completely abandoned silver coins ten years later, which were by now just simply a bronze coin that was quickly dipped in silver. He then made a new silver coin called the argenteus, where 96 coins were equal to a pound of silver, and it was equal to 50 denarii. It was made to help with the higher prices in the markets and to stop inflation. He also then made a new bronze coin that he called the nummus, and it was worth 10 denarii. Less than a decade later, however the nummus was worth 20 denarii, and the argenteus was worth 100 denarii. So basically, even though Diocletian tried to help the problem, the empire still suffered from inflation.
The Roman emperors would just basically debase their coinage constantly.
Modern Facts~
A government in financial distress, especially in times of war, will often find making more money the best action plan.
If we were to suddenly decrease our level of inflation, it would be just as dangerous as if we had a huge amount of inflation. A huge fall of inflation (deflation), would completely ruin our whole economy.
A certain amount of inflation is good!!!!
They have a measurement of inflation in the U.S., and it is called the consumer price index, which helps to find the average price of goods.
GDP is a measure of how much goods the economy produces as a whole. The US keeps a watch on this. The GDP also accounts for inflation. For example, if the GDP has increased by 6%, but the inflation has increased by 2%, then the GDP has basically only increased by 4%
Our interest rates sometimes do not keep up with our inflation.
Modern day Solutions~
The US central -banking system, or the Federal Reserve System (Fed), watches the inflation and deflation, and tries to keep it at just the right amount.
There are many specific policies that they have to deal with inflation. The Fed will watch many things to make sure that these are the right policies.
One of the things that they use is the consumer price index, which helps them see the average price of certain goods, and if they find it too high, the can raise the interests rates in the US as well.
Also, every six weeks the Fed and the Open Market Operations Committee have a meeting, and change the inflation levels each time the Fed funds rate and the discount rate varies.
We use interest rates!!!!!!!!
Contact an expert.... Email(s)~
To Cecilia Peek, professor at BYU for Department of Humanities, specializes in Romans and Greeks
Dear Professor Peek,
My name is Anna Nolan, and I am a seventh grade student at Nagel Middle School in Cincinnati, Ohio. My class is doing an assignment on the problems of ancient Rome, and my problem is inflation. I found that you were a professor at Brigham Young University, and was wondering if you could answer some of my questions about Rome’s inflation problem.
1. Why did the Romans think it would help their economy by making more coins that were severely debased? 2. I know that Diocletian tried to help control inflation by setting up a minimum wage. Did any of the other emperors see the problem as it was, and what it was doing to their society, and specifically try to stop it? 3. Based on my research so far, around 268 AD the barbarians were working for the Romans, and they were the only people who were getting gold for they pay, because they were too uncivilized to accept anything but gold. Is that true? 4. Lastly, I found that before the silver coins were completely abandoned as a way of payment, they were completely bronze, but just simply dipped in silver quickly before the public could get them. I also, however, heard that the coins were not bronze and silver, but tin and silver. Do you know which one is correct?
Thank you for your time!
Sincerely,
Anna Nolan
Reply~ None yet
To Douglas Adie, professor at Ohio State for economics, specializes in money and banking
Dear Professor Adie,
My name is Anna Nolan, and I am a student at Nagel Middle School in Cincinnati, Ohio. My class is working on a project about ancient Rome and its problems, and I have been researching the problem of inflation. I know that you are a professor at Ohio State, particularly in the field of economics. I was wondering if you could answer a few of my questions about modern day inflation.
1. During my research, I found that a certain amount of inflation is good- or even necessary- for the economy. Is that true? If so, what exactly is the right amount of inflation? 2. If inflation were to suddenly become a huge problem of the U.S., does the government have a definite way to ensure that inflation will not destroy the country, as it did to Rome? 3. I also found during my research that the U.S. Central Banking System carefully watches and keeps inflation at just the right amount. How exactly can they control inflation like that? They can’t just stop making a certain amount of money, or can they?
Script~ Roman Inflation Script
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Scene 9
Final Three Sources~
- Peden, Joseph R. "Inflation and the Fall of the Roman Empire." Ludwig Von Mises Institute. N.p., 7 Sept. 2009. Web. 23 Jan. 2013.
<http://mises.org/daily/3663>.Final Six Pictures (Because I did a video)~
Ancient Facts~
Modern Facts~
Modern day Solutions~
Contact an expert.... Email(s)~
To Cecilia Peek, professor at BYU for Department of Humanities, specializes in Romans and Greeks
Dear Professor Peek,
My name is Anna Nolan, and I am a seventh grade student at Nagel Middle School in Cincinnati, Ohio. My class is doing an assignment on the problems of ancient Rome, and my problem is inflation. I found that you were a professor at Brigham Young University, and was wondering if you could answer some of my questions about Rome’s inflation problem.
1. Why did the Romans think it would help their economy by making more coins that were severely debased?
2. I know that Diocletian tried to help control inflation by setting up a minimum wage. Did any of the other emperors see the problem as it was, and what it was doing to their society, and specifically try to stop it?
3. Based on my research so far, around 268 AD the barbarians were working for the Romans, and they were the only people who were getting gold for they pay, because they were too uncivilized to accept anything but gold. Is that true?
4. Lastly, I found that before the silver coins were completely abandoned as a way of payment, they were completely bronze, but just simply dipped in silver quickly before the public could get them. I also, however, heard that the coins were not bronze and silver, but tin and silver. Do you know which one is correct?
Thank you for your time!
Sincerely,
Anna Nolan
Reply~
None yet
To Douglas Adie, professor at Ohio State for economics, specializes in money and banking
Dear Professor Adie,
My name is Anna Nolan, and I am a student at Nagel Middle School in Cincinnati, Ohio. My class is working on a project about ancient Rome and its problems, and I have been researching the problem of inflation. I know that you are a professor at Ohio State, particularly in the field of economics. I was wondering if you could answer a few of my questions about modern day inflation.
1. During my research, I found that a certain amount of inflation is good- or even necessary- for the economy. Is that true? If so, what exactly is the right amount of inflation?
2. If inflation were to suddenly become a huge problem of the U.S., does the government have a definite way to ensure that inflation will not destroy the country, as it did to Rome?
3. I also found during my research that the U.S. Central Banking System carefully watches and keeps inflation at just the right amount. How exactly can they control inflation like that? They can’t just stop making a certain amount of money, or can they?
Thank you for your time!
Sincerely,
Anna Nolan
Reply~
None yet